The RBA Board has announced it will continue with highly accommodative monetary policy settings in the near term, albeit with a couple of the monetary policy levers notched back a step.
As anticipated, the Reserve Bank of Australia board today left the cash rate unchanged at 0.1 percent, despite increasing noise about an impending uptick in inflation and wages. KPMG believes…
Even with the current surge in house prices, the RBA has not changed the cash rate today – no surprise, given it has been signalling rates could stay at historically low levels until 2024.
The RBA was obliged to cut rates to 0.25%. It is right that monetary policy should be working in a co-ordinated manner with the government’s fiscal stimulus packages.
Last month it was a 50-50 call on whether the RBA would reduce the cash rate. This month it was a lot clearer – rates were rightly cut by 0.25 percent today and there will probably be another 0.25 percent cut next month.
While the decision to cut the cash rate by 25bp to 0.75 percent was priced into the market as a near certainty, the factors influencing the outcome were certainly not straightforward.
By cutting rates, the RBA is sending a signal to the market, to politicians and to the community at large, that the Australian economy is not firing on all cylinders
